Nearly one year ago, I warned yet again of the trend starting to turn against Facebook. For those who don't follow me, I was most bearish on Facebook - even before its IPO. This was not because I doubted the company, but because I doubted the Goldmans Sachs/Morgan Stanley snakeoil salesman valuation. To wit:

These reports and articles saved my subscribers a ton of money and making those few braver souls another ton in shorts and puts. I cautioned about Facebook again, not so much on valuation but on future growth prospects as FB actually encountered negative subscriber growth likely caused by competitors stealing potential market share during a period where it was supposed to be experiencing rapid growth (see I Don't Think Facebook Investors Will "Like" This ...). Of course, nearly all sell side analysts and financial pundits in the media somehow overlooked this.

Well, while on the topic, let's peruse this infographic by Finance Degree Center. Please note this is a very large graphic, so click it to enlarge and see the whole thing (it is big!).

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How the Facebook story got started...

Facebook started its institutional investment life as a very popular, very well known company. Goldman took this story (private) stock and went bananas with it, as meticulously illustrated in the following blog posts:

Here is a full year of free blog posts and paid research material warning that ANYBODY following the lead of Goldman, Morgan Stanley and JP Morgan on the Facebook offering would get their Face(book)s RIPPED!!! Could you imagine me on a reality TV show based on this stuff??? Well, it's coming...

Initially, I was going to go the PC (as in politically correct) route and treat Mr. Munster with kids gloves, but we're all adults here and I want everyone to realize that this is not a form of character assassination, a personal or professional attack, libel, slander or even my just being rude. Gene Munster is a professional, and a seemingly intelligent one at that. It's just that he is wrong, dead wrong, and has been wrong for some time. Despite his extreme inaccuracies regarding Apple and its share price, he is the go to guy for the financial press and mainstream media, not to mention the Apple-centric blogosphere for all things Apple investment related - despite his being wrong as hell.

First reference this quick 3 minute video..

Now reference the following graphic illustrating a search on Mr. Munster's Apple price targets...

Paul Krugman wrote an anti-cryptocurrency Op-Ed piece in the NY Times titled the "Anti-social Network". Now, I know the Times needs to sell ad space and subscriptions, hence technical accuracy may not be exactly what they are going for, but Mr. Krugman (the classical Keynesian economist type - I don't particularly subscribe to such schools of thought, I guess I'm not educated enough) has spewed so many inaccurate statements, false facts and just plain old indications of his total misunderstanding of the subject matter one would think it would behoove the Times to either have him issue corrections (or, since it is Op-Ed after all) have someone such as my self (you know, maybe a little less academically involved) come after him and clean up a little.

Now, where shall I start? To quote Mr. Krugman:

So how is bitcoin different? Unlike credit card transactions, which leave a digital trail, bitcoin transactions are designed to be anonymous and untraceable. When you transfer bitcoins to someone else, it’s as if you handed over a paper bag filled with $100 bills in a dark alley.

You see, the old school way of applied economics may very well have a big problem wrapping their collective heads around the concept of the absence of a "central authority" (read central bank) to act as the Grand Pubah, or ultimate financial intermediary. I'm just saying..

And to go on with the oh so witty comments from Mr. Krugman...

And sure enough, as best as anyone can tell the main use of bitcoin so far, other than as a target for speculation, has been for online versions of those dark-alley exchanges, with bitcoins traded for narcotics and other illegal items.

Bitcoin is a currency that's no older than 4 or 5 years. Has any other currency experienced a genesis any different than Bitcoin? The US dollar, when freshly minted was used for the spurious trade of human lives, the lives of my very own relatives several generations back, actually. It was the tool for rampant speculation as well, prone to extreme volatility and purposeful devaluations. Was it really so different from Bitcoin before it went mainstream (that is except for the purposeful devaluations part since there is no Grand Pubah to unilaterally call the market shots)? Methinks this economist may be picking and choosing his facts. For instance, look at how he started the Op-Ed missive in the first place...

Bitcoin’s wild ride may not have been the biggest business story of the past few weeks, but it was surely the most entertaining. Over the course of less than two weeks the price of the “digital currency” more than tripled. Then it fell more than 50 percent in a few hours. Suddenly, it felt as if we were back in the dot-com era.

The economic significance of this roller coaster was basically nil. But the furor over bitcoin was a useful lesson in the ways people misunderstand money — and in particular how they are misled by the desire to divorce the value of money from the society it serves.

Volatility is the name of the game with new currencies that have limited penetration and distribution, no? Why pick on bitcoin? Let's recall how the US dollar got started via the continental note, as per Wikipedia:

By the end of 1778, Continental Currency retained between only 1/5 to 1/7 of their original face value. By 1780, Continental bills - or Continentals - were worth just 1/40th of their face value. Despite efforts by Congress to reform the currency by removing the old bills from circulation and issuing new ones, the attempt met with little or no success. By May 1781, Continentals had become so worthless they ceased to circulate as money. Benjamin Franklin noted that the depreciation of the currency had, in effect, acted as a tax to pay for the war.[1] In the 1790s, after the ratification of the United States Constitution, Continentals could be exchanged for treasury bonds at 1% of face value.[2]..

Paul then goes on to compare Bitcoin enthusiasts to Goldbugs - which was inevitable. I'm far from a Goldbug, and those that follow me can attest. Apparently Mr. Krugman isn't either, but he appears to make a specious argument, to wit:

The similarity to goldbug rhetoric isn’t a coincidence, since goldbugs and bitcoin enthusiasts — bitbugs? — tend to share both libertarian politics and the belief that governments are vastly abusing their power to print money. At the same time, it’s very peculiar, since bitcoins are in a sense the ultimate fiat currency, with a value conjured out of thin air. Gold’s value comes in part because it has nonmonetary uses, such as filling teeth and making jewelry; paper currencies have value because they’re backed by the power of the state, which defines them as legal tender and accepts them as payment for taxes. Bitcoins, however, derive their value, if any, purely from self-fulfilling prophecy, the belief that other people will accept them as payment.

I really need somebody from the academic ivory towers to explain to me the difference between paper currencies being backed by the power of the state and Bitcoins alleged self fulfilling fulfilling prophecy of the belief that other people will accept them as payment. Both of these concepts share one common theme that seems to have escaped Mr. Krugman - Belief!!! Being backed by the full faith and power of the government means nothing unless you believe that government backing has a real value. That real value, if you do believe in it, is solely a function of your level of belief in the government and the governments willingness to back the currency and to what extent. After all, Greek bonds written under Greek law are backed by their government as well, as are Somalian bonds. So, pray tell, what's the difference between the value of those bonds and US treasuries? Belief, that's the difference! Again, a refresher from Wikipedia:

Today, like the currency of most nations, the dollar is fiat money, unbacked by any physical asset. A holder of a federal reserve note has no right to demand an asset such as gold or silver from the government in exchange for a note.[28] Consequently, some proponents of theintrinsic theory of value believe that the near-zero marginal cost of production of the current fiat dollar detracts from its attractiveness as a medium of exchange and store of value because a fiat currency without a marginal cost of production is easier to debase via overproduction and the subsequent inflation of the money supply.

I explained the business strategy behind the iPad designed to allow Apple to enter the netbook fray without Margin compression it worked!

The iPad, a raging success, still had lower margins than the cash cow iPhone franchise but still served its purpose in allowing Apple to diversify its revenue streams for over 60 percent of its profits came from a single product - and that's dangerous!

I warned that Google's Android will quickly start eating Apple's lunch, which was high in margin fat. I was proven correct as Apple's tablet market share (a market that Apple ingeniously reinvented) fell from 92% to 32% in just 3 short years.

Samsung emerged as the top Android vendor (again as forecast at BoomBustBlog, reference Deconstructing The Most Accurate Apple Analysis Ever) by offering a wide array of products, many of which offered superior performance to Apple's, due in large part to Android performance enhancements and capabilities.

Samsung released 7 and 8 inch tablets which sold well. I forecast that tablet sales will continue to dwindle due to the increasing capabilities and screen sizes of cell phones. The performance and comfort of use delta is shrinking quickly.

Samsung released the Galaxy Note, though panned by tech critics and pundits, was a success in the market.

Samsung released the Galaxy Note 2 which further defined the segment and was a raging success.

Apple US sales have completely stalled and growth is coming only from international sales. Those sales will be stymied in part by devices such as the Moto G on the low end and the Oppo Find 5 and N1on the high end - both with a price/performance ratio that can't be touched by a fat margin vendor - Apple or otherwise.

Google has fired a shot across the bow of the smartphone market, and it quivers in response

Yesterday, Google's Motorola division released the Moto G, a $179 full featured smartphone with a screen resolution and size superior to the $650 iPhone 5S, and an all day battery that bests the iPhone and Samsung Galaxy S series as well. This is a fully functional smartphone that is priced below the cost (as in the cost to build!!!) iPhone 5S and Samsung Galaxies (as in all of them!). Needless to say, this threatens to give Google significant market share in the low and mid-tiers, not to mention full vertical integration (the hardware, software, app ecosystem, cloud and services will belong to Google - leaving only the wireless pipes for it to contend with, and I would not sleep there either [Google Fiber in your diet}).

Google's cost shifting business model allows them to sell this phone below the actual cost of manufacturing and development of many if not all of its competitors. For those not familiar with the concept of cost shifting...

This is how Google did it...

For those who do not remember the importance of market share on margins, let's reminisce on post past...

Within two years of getting the mobile computing crown (toppling Apple and insuring that Nokia and Blackberry didn’t stand a chance), Samsung is already prepping to relinquish it. I know, the hoi polloi screams from the common street analyst’s rooftop, incessantly chanting “… but Samsung is dominating handset sales, creating and literally owning categories, and essentially out Appling Apple!”

Well, the reason why I apparently out-maneuver the Street in this space (as in others) is not vastly superior intellect nor a LiPoSilica Oxide powered crystal ball borne from some extraterrestrial technology. It’s actually so much simpler than all of that.

In foillowing up on the photographic capabilities of the flagship device from Oppo, I want to make my followers aware of the following updates. I have taken a few more pictures around town and I'd like to share what I've discovered from this capable device from the Chinese Margin Compressor known as Oppo.

We'll be sending out a firmware update on Nov. 14th (subject to change) and you should see improvements with both the camera and the battery life. Will confirm that date when I can. Thanks for sending in that post!

Maybe I'm a little cynical, but I doubt very seriously I can get a turnaround that fast from Samsung, LG, Apple, Nokia/Microsoft or Apple. I have a problem getting samples of the product sent over. Let this be and example of how hungry and responsice this little manufacturer of high end equipment is. When you raise the bar on performance and drop prices, what does it mean????

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On the topic of battery life, the N1 has the biggest battery that I'm aware of in a cell phone. Here's the results of my first day of usage. For those who don't speak Android, I used this phone for 22 and half hours taking photos and videos, VOIP phone calls, surfing the web, etc. and still had 19% battery left. Oppo says there's an update coming out in 3 days that will further extend battery life. How do they achieve such a long lasting battery? A 3,600mAH battery (the largest in the industry) coupled with a CPU chip that is frugal, no LTE (but it does have penta-band HSPA+) and optimized and above all, light, customization to the Android OS.

Regarding the picture below, the phone was plugged into a car charger between 10 to 20 minutes in the middle of the day, and although the cellular radio was on, no SIM chip was installed. Instead I used VOIP while tethered to my other phone throughout the day. Most other sensors and radios were on and I took extensive full resolution pictures with and without the flash.

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Why am I focusing on the camera so much?

When the first camera appeared on cell phones in Japan in 2000 and shortly thereafter in the states, photography from the phone was a novelty. The pictures were grainy, blurry and very low resolution. It was at this time that the camera manufacturers should have caught on. Alas, like practically any other successful industry, they rested on thier laurels as cell phone and then smart phone manufacturers steadily increased the performance of their devices. Fastforward ten years and these cell phones have all but decimated the once powerhouses in point and shoot photography. Ask Kodak, Olympus, Polariod and Minolta if you doubt me, or reference Put your point-and-shoot in a museum, next-gen phones have finally...

Now, we have the heavy weights of the photography industry - who have all gove digital - and they are exhibiting the same hubris as the smaller point and shoot guys - you know, the guys who are all but out of business. Reference To Save Itself, The DSLR Market Should Look To Smartphones And Revalue Each Press Of The Shutter or reference the WSJ report claiming DSLR camera shipments could fall 9.1 percent by the end of 2013, versus 2012, according to research firm IDC. As you might imagine, DSLR diehards poo poo this notion, but then again so did the executives of the point and shoot industry 5 years ago. Don't worry fellas, I know - "But... But... But... It's different this time!"

From the N1 without the software patch...20131110 155251 9411IMG20131110151456 1IMG20131110152940IMG20131111015705IMG20131111024856

In continuing with the "Hardware is Dead" mantra, I bring you a company that I introduced last year as the maker of some of the most beautiful, durable and innovative handsets available. Below is an introductory overview of their latest flagship handset, the N1 from Oppo - a Chinese company that I featured on my blog about a year and a half ago with thier then flagship - the Finder 5. It was the first five inch full HD phone that I was aware of. It was the first phone sporting a 13 MP camera that I knew of. It was sexy, a sandwich of metal and hardened glass. It was also the thinnest smartphone that I knew of at the time. Although a year old, it is still competitive in terms of performance and specs. Unlike the iPhone, it was durable as well. How durable? Check out this demo...

So, if you're a true nerd such as I, you must wonder what the follow-up flagship from this little known company that makes reference quality high end Blu-Ray players is like. Well, rotating 13 MP camera, 3600 mAH battery, BLE remote control, rear mounted touch pad - it's different and an obvious attempt at innovation beyond the simple rectangular slabs that we've grown used to. Of course, not everthing is herbs and roses here, but one thing is for sure - priced below $600 US, it can easily put margin pressure on the big boys if it catches on. I should know, because I pioneered the hypothesis of Southeast Asian companies armed with Android ripping through profit margins of the big boys three years ago when the mere thought of such was blasphemous and I was thought to be inept. Now, if you Google "Apple Samsung margin compression" you get...

Here's a quick video of the unboxing and a comparison to the market leader as well as my personal favorite. There are two technical errors in the video, One, the camera does NOT have OIS (optical image stabilization) which is apparent in low light situations, and two the camera assembly has a 6 element lens array, not 7. This may be minor to most, but the technical geeks among you will notice the snafu.

About the camera...

There's a lot to write about the camera on this phone. Let's start with...

The Good

Let's face it, the iPhone is still probably the most popular phone among the cosmopolitan, metropolitan cutie crowd. They buy it because it's cute, and these girls use the cute iPhone to make a lot of cute "selfies". From grade school, to high school, to undergrad, to college and grad school, to the young adult dating scene, to married with kids, to taking self portrait flics with the grand kids - the front camera on smartphones get worn out by the female cosmo crowd. This is where the N1 stands out. It uses one very high quality camera on a swivel instead of a big/little combination back and front. The results, combined with innovative software, are quite impressive.

The self photography (or selfie) market is bigger than even I thought. I took the N1 to various spots around NYC city and let cute girls esconced in make-up try it out. They loved it. Check this out...

You swivel the camera a full 270 degrees to the from to take a hi-res selfie...

CAM00303

You then invoke the "Make-up" app and choose the desired effect (sexy, elegant, sping freshness, blah, blah, blahhh...). The phone then applies its processing wizardy around your face, eyes, head and mouth. If you click the "fine tuning" option, you can drill down to specific facial parts to custom sculpt your face...

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CAM00305

CAM00300

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You custom sculpt your facial parts by grabbing and dragging the dots to where you'd like to expand or contract your eyes, mouth and lips...

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This is the finished product...

CAM00312

For those non-make up type guys (I profess that I may be one of them) who may not be able to see the difference, this is a split screen comparison...

picsay-1384027953

I believe Oppo may be on to something here...

Then there's the Bad...

I consider the N1 to be a photography-centric phone, and as such I must admit that I was rather dissappointed with the performance of the camera in low light settings and even in broad daylight, particularly when compared to competing high performing shooters such as the LG G2 and the new Nokia phablet (I believe it's the 1520) & the 1020. There was a material amount of noise, graininess and trouble locking on focus. From a company that has put out such high quality product in the recent past, I was really taken aback. So much so that I decided to look into the problem further. In defense of the company, I believe I got one of the very first - if not the first - production models and it may have shipped a tad bit incomplete.

The camera on the Oppo N1 is a 13 Megapixel Sony EXMOR RS Stacked CMOS Sensor unit. This is the exact same sensor found on the Find 5 (above), the Lenovo K900, the Samsung Galaxy S4 and the Galaxy Note 3. It is a 1/3.06″ sensor. Oppo attempts to set it apart from the competition by complementing it with a six element f2.0 aperture lens. According to the marketing material the lens is coated with IR and Blue filters for reduced chromatic aberrations and purple fringing. The innovative part is that whole unit sits on a swivel-type arrangement that can rotate 206 degrees for using the same camera for front-facing as well as rear-facing shots.

Remember investors, it is the higher end cameras on phones that have all but destroyed the point and shoot industry (ie. Minolta>Sony, Samsung, Nikon, Canon, etc.) and is clearly threatening to move up the food chain to higher end prosumer and mirrorless devices. Many may poo - poo this statement and sentiment, but then again so did those consumer point and shoot manufactuers from a few years ago - you know those very same guys whose market is just about subsumed, and it is clear that the smart money will look for photographic innovation from companies who are trying to outrun margin compression. The problem is you will probably not be able to do so unless you have low labor cost structure - as in SE Asia, and even then, the laws of economics will catch up to you - right Samsung? From the Oppo web site...

Cutting Edge Optics

N1 is the first Android smartphone to use six physical lenses, giving you a clearer image while eliminating any distortion. The latest generation stacked CMOS sensor, upgraded type 1/3.06 imaging module and f/2.0 wide aperture lets more light in, so you can take great photos even in dark environments.

Not satisfied with what was available, we partnered with the leading optics companies to tailor make our own image-processing solution for improved white balance, exposure and focus. No matter the lighting condition, the N1 camera captures astonishing clarity and detail.

Reinvented Flash Technology

Like any camera, the N1 is equipped with a flash to light up dark environments. The dual flash design consists of a normal flash for back facing shots and a diffused softer light for when you flip the camera forward. With its brightness tunable via the OPPO N1 camera software, the front facing flash will provide perfect lighting conditions for any front facing shots.

Capture the Essence of Time

With unprecedented hardware support, the N1 supports long exposure photography of up to 8 seconds. Capture more than pictures; capture the pulse of the moment.

Camera Design

Designing a rotating camera was a challenging engineering problem. More than a year of work and over 20 different camera designs ultimately led to the simple brilliance of the OPPO N1. The small camera housing includes more than 10 modules, 50 cables, and 67 components. Every part is structurally reinforced and undergoes anti-static treatment.

So, you must be asking the same question that I asked myself. With all of this fancy schmancy camera tech, how is it that the N1 produced pictures that I wasn't happy with? For one, I believe it's a low level firmware and/or driver issue. That means that the N1 could still quite possible be the best thing since sliced bread, but was shipped (to me, at least) with half-baked software that crippled what looks like excellent hardware. This is a guess, mind you. This is the evidence.

This is the LG G2 pic taken at full resolution with all automatic settings on, the picture has been cropped to fit comfortably on this page.

G2 sample cropped

This is the Oppo N1 pic taken under the same conditions and settings...

N1 sample cropped

There is much more noise in the N1s version, and the more you zoom in and the closer you look the more apparent it is. The N1 underperformed the Note 3's camera and LG G2 (although most cameras do, even the Note 3). The N1 was litereally blown out of the water by the Nokia phablet. I presumed such poor performance from such apparently premium hardware stemmed from over compression and misprocessing of raw data from the sensor. To remedy such I downloaded Camere FV5, an app that allows DSLR level flexibility in configuring your Android smartphone's camera. It allows you to adjust the compression of the JPG file upon saving and to save in a near lossless PNG format. To all of the non-geeks who actually have a life and have no idea of what I'm talking about, this app allows you to take pictures without being tampered with by the OEM enginneers forethoughts on how the picture should be processed once taken. The logis is, if the pics were being overprocessed or compressed too much, this would solve the problem. Alas, even with the lack of compression, subpar results ensued.

I'm going to give Oppo the benefit of the doubt on this one and request they clarify the issue with the camera. If I'm right and the drivers need to be tweaked and/or rewritten, the N1 may very well still be one of the best photographic phones on the market.

My next post on this topic will cover the N1s other features in comparison to its competition, how it pans out in day to day use (there's plenty of other sites who do benchmarks and other tech stuff) and most importantly whether this device or a device like this can make a dent in the US markets and consequently in Apple and Samung's profit margins.

Who Is Reggie Middleton?

Reggie Middleton is an entrepreneurial investor who guides a small team of independent analysts to uncover truths, seldom if, ever published in the mainstream media or Wall Street analyst reports.

Reggie Middleton Wins CNBC's First Ever Stock Draft Investment Contest, and Does So By A Wide Margin!

Reggie Middleton's The Only Investor/Analyst To Publicly & Timely Call To Short Apple At It's All Time High and Go Long Google On CNBC!

The Financial Nostradamus!

Who Is Reggie Middleton & What Is BoomBustBlog?

Since the inception of his BoomBustBlog, he has established an outstanding track record, including but not limited to, the call of....

Home builders falling and their grossly misleading use of off balance sheet structures to conceal excessive debt in November of 2007 (not a single sell side analyst that we know of made mention of this very material point in the industry): Lennar, Voodoo Accounting & Other Things of Mystery and Myth!

The collapse of Bear Stearns in January 2008 (2 months before Bear Stearns fell, while trading in the $100s and still had buy ratings and investment grade AA or better from the ratings agencies): Is this the Breaking of the Bear? | After the collapse, a prudent bullish call as well... Joe Lewis on the Bear Stearns buyout Monday, March 17th, 2008: "The problem with the deal is that it is too low, and too favorable for Morgan. It is literally guaranteed to drive angst from the other side. Whenever you do a deal, you always make sure the other side gets to walk away with something. If you don’t you always risk the deal falling though unnecessarily. $2 is a slap in the face to employees who have lost a life savings and have the power to block the deal. At the very least, by the building at market price and get the company for free!" | BSC calls are almost free and the JP Morgan Deal is not signed in stone Monday, March 17th, 2008 | This is going to be an exciting, and scary morning Monday, March 17th, 2008 | As I anticipated, Bear Stearns is not a done deal Tuesday, March 18th, 2008 [Bear Stearns stock goes from $1 and change to $10, front month calls literally explode from pennies to several dollars]

The ENTIRE Pan-European Sovereign Debt Crisis (potentially soon to be the Global Sovereign Debt Crisis) starting in January of 2009 and explicit detail as of January 2010: The Pan-European Sovereign Debt Crisis

Well, last week we say Apple write down nearly a billion dollars on this event, and today we can expect the same from Microsoft, again potentially couched in the effect of its weakening but still apparent reality distortion field. To wit, ZDnet publishes: Microsoft improves its free online Office

Where's Office for the iPad? Maybe you're looking in the wrong place. Today, Microsoft released its latest batch of Office Web App updates, pushing its free offering well past the feature set offered by its rivals.

Office is Microsoft's fattest cash cow. It's even more profitable than the ubiquitous Windows franchise. Pray tell, what happens when you materially increase functionality while simultaneously drop and/or maintain pricing at ZERO?

Bloomberg reports: T-Mobile Sales Beat Analysts’ Estimates as Subscribers Surge. So, how did BoomBustBloggers know this would occur? Well, It started last year with the article "Deadbeat Carrier Creative Destruction In The Ongoing Mobile Computing Wars". You see, US wireless carriers are running one of the biggest Ponzi schemes around. The buy overpriced hardware from manufacturers on contract (see Have We Reached "Peak Premium Smartphone"?) mark up said hardware and then offer it at heavily and usurious financing rate otherwise called a subsidy. The US consumer buys these overpriced devices for a relatively small downpayment and then proceeds to pay through the nose to the carrier a very, very margin rich wireless fee for what amounts to a commodity service of dumb virtual pipes through the airwaves. Not only does the carrier recoup its outlay for the device purchased en masse from the OEM, the carrier also tacks on and collects a very large premium for its post paid wireless services as well.

There are 4 major national carriers in the US, basically two big ones two smaller ones. The smallest of the 4, T-Mobile, consistently go beat up - losing out on the right to subsidize the iPhone at a loss (like AT&T used to and Sprint still does) and basically losing subscribers. Then they decided to do something about it. They said, "Hey, let's stop being deadbeats!". By changing their pricing plans and eliminating subsidies and instead selling pure access to their virtual pipes (like a carrier is supposed to) combined with actual "real" financing of the hardware (at competitive rates, nonetheless) they essentially committed DeadBeat Carrier Blashphemy. The only issue was, it worked, to the chagrin of the competition - reference:

T-Mobile US Inc. (TMUS), the fourth-largest U.S. wireless carrier, reported third-quarter sales that exceeded analysts’ estimates as its cheaper service plans and phone-upgrade strategy attracted customers.

Sales rose to $6.69 billion, an increase of 8.7 percent when adjusted to account for T-Mobile’s merger with MetroPCS Communications Inc., according to a statement today from the Bellevue, Washington-based company. Analysts projected $6.58 billion, the average of estimates compiled by Bloomberg.

T-Mobile, which combined with MetroPCS in May, added 648,000 new monthly subscribers, topping the 401,000 average estimate and gaining for a second straight quarter.

T-Mobile, which merged with MetroPCS six months ago, added 648,000 new monthly subscribers, topping the 401,000 average estimate and gaining for a second straight quarter. T-Mobile has benefited from offers such as zero-down financing on phones and a $10-a-month service that lets customers upgrade their devices more often -- a program that rivals such as Verizon Wireless, AT&T Inc. (T)and Sprint Corp. (S) have now adopted.

The net loss was $36 million, following a second-quarter net loss of $16 million. The average phone bill for monthly subscribers shrank about 3 percent to $52.20 from the second quarter as more customers opted for cheaper plans. Analysts had projected $52.86, according to a survey of seven estimates by Bloomberg.

... T-Mobile rose 1.7 percent to $28.83 at 9:42 a.m. in New York. As of yesterday, the shares had climbed 72 percent since May 1, following the MetroPCS merger. Deutsche Telekom rose 0.6 percent to 11.82 euros in Frankfurt.

Note: The next three annual subscriptions (professional or higher) will get the opportunity to purchase their own pair of Google Glass Explorer Edition, through the Glass referral program. Click here to subscribe, and if you want to be referred to purchase your own pair of Glass then email me after payment.

Apple Still Has The Business and Financial Press Mesmerized With It’s RDF (Reality Distortion Field)

For some reason when I read management comments and financial statements I seem to see something totally different from Sell Side Analysts and the financial and business press. This is an excerpt from “Business Insider” on Apple’s Q4 earnings results:

The stock initially tanked after the numbers were out thanks to weaker than expected margin guidance. Apple guided to 36.5%-37.5%, which suggests a flat margin despite a new iPhone.

On the company's earnings call, it explained why margin was lighter than expected and the stock came roaring back. At last check it was down slightly in after hours trading.

Apple's margin will be hit by a combination of factors. It is selling new iPads that cost more to make, new laptops, foreign exchange issues, and most importantly, a $900 million sequential increase in deferred revenue thanks to all the software it is giving away with iOS and Macs.

On the earnings call, Gene Munster of Piper Jaffray said the real margin would have been closer to 38.5%, and Apple basically confirmed it. This sent the stock climbing.

Apple's margins have been and will be hit harder as I've predicted. This non-sense about the deferred revenue from giving away software and Gene Munster's "real margin" comments are utter nonsense. Apple's reported margin IS ITS "REAL MARGIN"! The reason it is giving away its core software products for free is to compete with the entry and the threat of Microsoft's Surface 2 tablet that comes bundled with a real, the real, office suite - Microsoft Office. This makes it real deal contender in the enterprise, where Office is not on the de facto standard - it is the standard. It also has to compete with Google's Android who bought Quick Office and is now giving that office suite for free. For those who don't think that makes a difference, what OS do you think took the iPad from 92% market share in 2010 to 32% market share last quarter?

Let me add to this since both Gene Munster and I are both frequent CNBC guests:

gene munster aapl forecast

On the same network, I recommended an Apple short:

If you did this investment thing to actually make money, who do you think CNBC should have on more regularly???

KitKat ships with Google’s Quickoffice, bringing Microsoft Office editing out of the box to all new Android users

With Android 4.4 KitKat, Google’s biggest blow to Microsoft isn’t against Windows Phone. It’s against Microsoft Office. You see, KitKat ships with Quickoffice, letting you edit Microsoft Office documents, spreadsheets, and presentations on the go, without paying a dime, straight out of the box.

This tidbit was largely lost in the news yesterday, given the large number of improvements and new features that KitKat offers. Yet it’s a very big deal: every Android user that upgrades to KitKat will get Google’s Quickoffice, and every new Android device (starting with the Nexus 5) that ships with KitKat or higher will get access to Quickoffice.

office anywhere 730x457 KitKat ships with Googles Quickoffice, bringing Microsoft Office editing out of the box to all new Android users